NFIB Asks Federal Court of Appeals to Review NLRB’s Joint Employer Standard - Global Trade Magazine
  June 25th, 2016 | Written by

NFIB Asks Federal Court of Appeals to Review NLRB’s Joint Employer Standard

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  • Legal issue for court is whether the NLRB has authority to broaden the legal standard for joint employer.
  • NFIB says NLRB abandoned the standard it had established for more than 30 years.
  • NFIB: “The NLRB’s new standard completely muddles the definition of an employer.”

The National Labor Relations Board new joint employer standard would make small businesses liable for unlawful labor practices committed by entities completely outside of their control, said the National Federation of Independent Business (NFIB) in a brief filed before the D.C. Court of Appeals.

At issue in Browning-Ferris Industries of California v. the National Labor Relations Board is whether the NLRB acted within its authority when it decided to broaden the legal standard for joint employer determinations. In doing so, the NLRB abandoned the standard it had established for more than 30 years, according to the NFIB. Under the new standard, the NLRB said that it would consider indirect factors, such as contractual terms in service and franchising agreements, when determining whether a joint-employer relationship exists.

“The NLRB’s new standard completely muddles the definition of an employer and creates a huge wave of uncertainty,” said NFIB Small Business Legal Center Executive Director Karen Harned. “This is a major concern for small, independent businesses because it will create a severe disincentive to contract with smaller firms. No rational business owner is going to risk a hefty lawsuit for employees that they have not hired.”

In the case at hand, the NLRB determined that Brown-Ferris Industries, the owner and operator of a California recycling facility, is a “joint employer” with a temporary employment agency that actually supplied the workers. As such, the recycler could be required to bargain collectively with workers under United States labor law.

The same kind of logic could be applied to the warehousing and distribution industry, leading to an increase in liability exposure and union organizing activities in those sectors. Workers would first have to vote the union in as their representative.

The business model that led the NLRB to rule in the Brown-Ferris case, also prevails in warehouse operations. Companies like Walmart, Amazon, and Home Depot use facilities to store their merchandise where a third-party staffing agency provides the workforce.

Experts agree that the Browning-Ferris decision will make it easier to bring warehouse users to the bargaining table as joint employers.

Under U.S. labor law, an employer controls the conditions of work such as setting production goals and scheduling work shifts. Retailers often manage warehouses in that way and if they continue to do so could face successful union drives.

Besides that, if government agencies pick up on the NLRB’s “joint employer” concept, companies could find themselves on the hook for wage-hour violations, worker safety issues, and employment discrimination by staffing agencies.

“Previously, owners were only liable for an employee’s action if they had a direct involvement in essential employment matters, which seems fair,” said Harned. “If this rule stands, every business owner will be forced to reevaluate his or her contractual relationships and that could be devastating for franchises and subcontractors.”

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